Risk management tools to stabilise farmers’ incomes are a priority for French farmers’ representatives. However, their growth could be hampered by the decline of the CAP budget. EURACTIV.fr reports.

Discussions on the post-2020 CAP are ongoing and for farmers unions, risk management is a major issue.

“We need a more aggressive policy on risk management“, according to Jérome Volle, vice president of the French National Federation of Farmers’ Union (FNSEA).

“Risk management tools need to be strengthened,” said André Bernard, president of the Vaucluse department’s Chamber of Agriculture and elected referent on risk management at the Permanent Assembly of Chambers of Agriculture.

Recent developments have put risk management at the heart of agricultural issues. “Farmers face many risks: environmental with climate change, economic with the high volatility of prices of agricultural products and health risks,” Bernard noted.

New tools were implemented at the European level in 2014. The 2014-2020 CAP allows member states to contribute financially to the payment of insurance premiums and insurance funds, compensating for losses due to weather and sanitary phenomena (animal or plant diseases).

On economic risks, the current CAP provides for the establishment of an income stabilisation instrument.

However, the use of these tools has been uneven. France has used subsidy mechanisms for climate insurance and insurance funds in the health field but has not set up an income stabilisation tool like other member states have, as shown by a report put forward by the French National Assembly on April 2017.

The role of member states

For farmers’ unions, both levels – European and national – are necessary and must go together. “The CAP is a toolbox, we are in favour of European tools to avoid market distortions and subsidiarity to allow member states to make adaptations to their agriculture,” said Jérome Volle.

In October 2017, the European Parliament, the Commission and the Council reached an agreement on the revision of this regulation, easing the conditions for the use of climate insurance.

It came into effect on 1 January 2018, making it possible to lower the activation threshold from 30% to 20%, and to increase the compensation rate by up to 70%, compared to 65% previously. Nevertheless, the French Agriculture Minister Stéphane Travert stated at the FNSEA congress on 29 March that he did not intend to follow up on this possibility.

All about the money

The reason for this outright refusal is that the minister is counting his money. “All these requests have a cost,” Travert stated at the FNSEA conference.

The budget raises just as many doubts at the European level. Uncertainty looms over the EU’s 2020-27 multiannual financial framework, with a Commission proposal expected in May.

With the loss of the UK contribution and the emergence of new priorities such as defence and migration, farmers’ unions will have to deal with smaller allocations. “We need a budget that is sufficient for European agriculture to weather the storm of globalisation,” said Michel Dantin, EPP MEP.

Proper use of budget

The French government is currently campaigning to safeguard the CAP, while the Commission wants to downsize it. Agriculture only ranked ninth in the future priorities put forward by the Juncker Commission last February. This is unacceptable for large agricultural countries, who are working together to try and save what can be saved: Ireland, Spain and France, but also smaller countries, and Germany.

Beyond the amount, the very use of the budget is debated. An issue will be the distribution of the amount between the different objectives of the CAP, for example between the financing of direct payments, the development of other risk management tools and making agriculture more “green”.

Furthermore, some advocate for a more ambitious use of the budget. French Socialists speak in favour of making the CAP budget a direct lever for stabilising farmers’ incomes. They support a countercyclical system, whereby the budget would help farmers in crises and form reserves during times of good economic conditions.

According to Socialist MEP Jean-Paul Denanot, the establishment of these reserves would require structuring the CAP budget over several years, and not on one year. “This is not impossible, but it requires political will,” Denanot said.